by Tom Roseen.
On March 10, 2022, Refinitiv Lipper unveiled the results of the Refinitiv Lipper Fund Awards for the United States in conjunction with our long-term media partner InvestmentNews.
Because of continued concern revolving around the COVID-19 pandemic, physical in-person events won’t be held, but we have a series of articles, blogs, and videos highlighting investment excellence in what has been a robust year for fund managers. The Refinitiv Lipper Fund Awards should get a lot of attention from the asset management industry since these awards showcase the ability of a fund to deliver strong risk-adjusted returns in comparison to its peers.
Different methodologies lead to different results
While the Refinitiv Lipper Fund Awards are entirely quantitative, the award winners are not determined by picking the funds with the highest returns within their U.S. mutual fund classifications over the respective awards periods.
The Refinitiv Lipper Fund Awards are based on the Lipper Leader rating for Consistent Return. These ratings are calculated using a risk-adjusted return model that is based on the effective return of the fund over multiple non-overlapping periods—within the respective three-, five-, and/or 10-year horizons. The calculations over multiple periods ensure that all periods in which a fund underperforms the average of its peer group are identified.
Then Refinitiv Lipper uses a utility function based on behavioral finance theory—relative loss avoidance—to penalize periods of underperformance against the peer-group average of eligible funds, with more significant weightings being given to excess losses. Consistent Return is a risk-adjusted performance measure for investors with a stronger risk aversion of clustering of losses than of gains.
The calculation methodology ensures that the winners are funds that have provided superior consistency and risk-adjusted returns compared to a group of similar funds. We believe this is more in line with how investors view financial gains and losses, meaning that funds receiving a Lipper fund award may be best suited for investors who value a fund’s year-over-year performance consistency relative to other funds in a particular peer group. A document outlining the full methodology for the Refinitiv Lipper Fund Awards can be found here.
The best mutual funds in the United States
The Refinitiv Lipper Fund Awards honor those funds which had the highest score in the Lipper Leader rating for Consistent Return over the three-, five- and/or 10-year periods. Overall, there were 116 funds that won an award for the three-year period ended November 30, 2021. Also, 114 funds were recognized with a Lipper Fund Award over the five-year period and 101 funds won the prestigious trophy for the 10-year period. The complete lists of the winning funds can be found on our awards website.
Here are a few examples of fund excellence highlighted in this year’s Refinitiv Lipper United States Fund Awards:
International Large-Cap Value Funds
Fidelity Series International Value Fund, sweeping its classification this year, was named the Lipper Fund Award winner for International Large-Cap Value Funds over the three-, five-, and 10-year periods ended November 30, 2021.
Exhibit 1: Three-Year Growth of $10,000 Fidelity Series International Value Fund versus Lipper International Large-Cap Value Index
Source: Refinitiv Lipper, an LSEG Business
Precious Metals Equity Funds
OCM Gold Fund, Advisor Shares was designated as the three-, five-, and 10-year 2022 Lipper Fund Award winner for Precious Metals Equity Funds. The OCM Gold Fund swept its classification for the second consecutive year, winning in all three measurement periods for 2021 and 2022.
Exhibit 2: Three-Year Growth of $10,000 OCM Gold Fund, Advisor Shares versus Lipper Precious Metals Equity Funds Index
Source: Refinitiv Lipper, an LSEG Business
General & Insured Municipal Debt Funds
Invesco AMT-Free Municipal Fund, Y Shares swept its classification for the fourth consecutive year—winning for the three-, five-, and 10-year periods—and was named the Lipper 2022 Fund Award winner for General & Insured Municipal Debt Funds for the three measurement periods ended November 30, 2021.
Exhibit 3: Three-Year Growth of $10,000 Invesco AMT-Free Municipal Fund, Y Shares versus Lipper General & Insured Municipal Debt Funds Index
Source: Refinitiv Lipper, an LSEG Business
The best asset management groups in the United States
The group awards are divided into large and small asset management groups based on a regional assets-under-management split. For the U.S. awards, that breakpoint was $131.2 billion in fund assets under management as of November 30, 2021. To qualify for the group awards, a large fund family group must have at least five equity, five bond, and/or three mixed-assets portfolios, while a small fund family group must have at least three equity, three bond, and/or three mixed-assets portfolios. The complete list of the winning fund family groups can be found on our awards website.
Competing against 30 other fund families for the 2022 claim to fame as the best large fund family equity group, JP Morgan Investment Management Inc. took the top billing this year, while Needham Investment Management LLC, competing against 179 other fund families, took the top honors as the best small fund family equity group.
Within the bond segment, the best large asset fund manager was Nuveen, which outperformed 29 competitors in this group, while the for the second consecutive year Carillon Tower Advisers, Inc., which beat 82 other competitors, was the best bond small fund family manager.
There were 28 and 49 asset managers competing for large and small fund family groups, respectively, in the mixed-assets funds segment. Lord Abbett & Co LLC won the trophy for the best mixed-assets large fund manager group, while Virtus Investment Advisers Inc. was at the top of the leaderboard for the best mixed-assets small fund manager group.
The winning large and small fund management firms for the overall award demonstrated a combined above-average risk-adjusted performance within its bond, equity, and mixed-assets product lineup. In this category, there were 28 and 29 fund families, respectively, competing for the prestigious trophy. T. Rowe Price Associates Inc. was named the best overall large fund management group for 2022, while Calamos Advisors LLC, took the top billing for the best overall small fund management group.
As one can see from the number of fund management groups in each category, the Lipper Fund Awards are exceedingly competitive and recognize the fund managers that display fund management excellence within the industry. The Awards commemorate the expertise of the collective fund management industry and the individual funds’ ability to outperform their peers on a risk-adjusted basis.
The views expressed are the views of the author and not necessarily those of Refinitiv. This material is provided as market commentary and for educational purposes only and does not constitute investment research or advice. Refinitiv cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. Please consult with a qualified professional for financial advice.
The Refinitiv Lipper Fund Awards, granted annually, highlight funds and fund companies that have excelled in delivering consistently strong risk-adjusted performance relative to their peers.
The Refinitiv Lipper Fund Awards are based on the Lipper Leader for Consistent Return rating, which is a risk-adjusted performance measure calculated over 36, 60, and 120 months. The fund with the highest Lipper Leader for Consistent Return (Effective Return) value in each eligible classification wins the Refinitiv Lipper Fund Award. For more information, see lipperfundawards.com. Although Refinitiv Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Refinitiv Lipper.
About Refinitiv Lipper Fund Awards:
For more than 30 years and in over 17 countries worldwide, the highly respected Refinitiv Lipper Awards have honored funds and fund management firms that have excelled in providing consistently strong risk-adjusted performance relative to their peers and focus the investment world on top funds. The merit of the winners is based on entirely objective, quantitative criteria. This, coupled with the unmatched depth of fund data, results in a unique level of prestige and ensures the award has lasting value. Renowned fund data and proprietary methodology is the foundation of this prestigious award qualification, recognizing excellence in fund management. Find out more at www.lipperfundawards.com.